Does a Ratification Contract Require Good Faith?

October 5, 2022

A contract ensures stable and productive relationships among entities by defining the terms of agreement among them. To ensure that contracts function properly, it is important that they are approved by all. To do so, contracts between parties such as employers and employees are created after bargaining between both parties, and it is expected that the bargaining is done in good faith.

Read ahead to learn about contract ratification, why contracts should be negotiated in good faith, and the election process for contract ratification (which is basically voting by acclamation). 

What Is Contract Ratification?

Contract ratification is the approval of a contract by the members of an organization before the contract is implemented. The concept of contract ratification applies to contracts created by organizations such as workers unions and business corporations, elucidating the rights and responsibilities of members. For example, the contract may delineate terms of employment and duties of the employer. 

The contract must be ratified by members before implementation so that the terms and conditions listed in the contract are acceptable to the majority. 

How Is a Procedure for Contract Ratification Ensured?

The procedure for contract ratification is stipulated in the contract ratification clause. This clause is part of the contract itself and lays out the rules and procedures for contract ratification.

The contract ratification clause ensures fairness and accountability in the ratification process by precluding any confusion among the organization members, the leadership, and the drafters of the contract over how to ratify and implement the contract.

What Is the General Procedure for Contract Ratification?

The draft of a contract is created by a drafting committee after negotiations between the organization leadership or employers and a representative body of the employees, also known as a ‘bargaining committee.’ The bargaining committee negotiates the terms of the contract with the employers, taking into consideration the interests of the employees. Once the terms are negotiated, the contract is drawn up and presented to the members of the organization. 

Lastly, a vote is held according to the procedure outlined in the ratification clause. The general process of the election is the same—members either vote ‘yes’ or ‘no’ to the terms of the contract. If the majority (at least more than 50% of members) vote yes, the contract is ratified. If fewer than 50% vote yes, the contract fails to be ratified. 

What Does It Mean to Bargain in Good Faith?

Bargaining in good faith means that the employers bargain with the awareness that they must fulfill the conditions they agree upon through bargaining. It also means that employers will not make certain changes without bargaining with the bargaining committee and will not bypass the union or committee to make agreements directly with the employees it represents.

Why Is It Important to Bargain in Good Faith?

Bargaining in good faith is crucial for an organization not only to maintain its integrity and keep its employees happy, but also to prevent a high turnover rate and bad reputation. 

A company that fails to bargain in good faith might:

  • Fail to meet with the bargaining committee regularly
  • Engage in piecemeal bargaining
  • Make modifications in terms of the contract without consulting the bargaining committee
  • Refuse to provide information that the committee representing the employees claims is important for the bargaining process

Such actions can erode employee trust in the company and impede ratification of the contract. It may also lead to employees becoming disconcerted and leaving the company.  

What Happens After the Bargaining?

Once the bargaining committee has negotiated with the employers and a contract has been drawn up, it is put to a vote. There are two main ways to vote for contract ratification—on paper or online.

Voting Through Traditional Paper Ballot

Elections are usually held through a traditional paper ballot method in which each person registers one vote using a paper ballot. Employees can either vote ‘yes’ or ‘no’ through the paper ballot, which is meant to remain secret. Once all votes are collected, they are counted and tallied. If over 50% of people vote yes for contract ratification, the contract is ratified. 

Voting Online Through an Election Website

In this era of rapid digitalization, important processes like voting for ratification are being moved online, and there are many election websites, like ElectionBuddy, that allow organizations to hold votes online. The ballot for the election is generated according to the requirements of the election—for contract ratification, the ballot typically provides the option to choose either ‘yes’ or ‘no.’ The ballot may also allow you to choose the option to abstain’ or to provide additional information or ask a question.

For more information on contract ratification, take a look at our recent post on whether the ratification of a contract can be withdrawn

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